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New York Forex Report: Markets Await Yellen Comments

New York Forex Report: Markets Await Yellen Comments

New York Forex Report: Focus today will fall on Fed Chair Yellen’s comments at the University of Michigan where she will also take audience questions after the London close. Higher yields have prompted pressure on equity markets globally today while gold prices have eased and crude prices have firmed somewhat. Lower stocks have boosted the JPY while firmer energy prices have supported the CAD, providing some offset to the USD’s broader strength. Sentix Investor Confidence, a gauge of expected economic sentiment six months out, rose to 23.9 in April, the highest since 2007, suggesting that private and institutional investors are looking through some of the short-term, political worries surrounding the Eurozone economy. GBP is facing a data-heavy week ahead of the Easter long weekend; CPI, jobs and house price data all figure this week, along with a speaking engagement for Gov. Carney Wednesday.

USD There was little dent from a disappointing headline NFP number as other job prints from jobless rate to wage growth and participation rate were all decent and offered no signs the US labour market has derailed from it is recovery path. Report showed the US added the least nonfarm jobs in ten months, a mere 98K and net two months revision for JanFeb was revised lower by 38K. However on a more comforting note, jobless rate improved 0.2ppt to its near decade-low at 4.5%, wages continued to sustain a 0.2% MOM increase and participation rate was held steady at 63.0%. Markets were cautious as it tried to digest a series of events: disappointing headline NFP job gains, Fed Dudley’s comments on the Fed balance sheet reduction plan, and US strike on Syria at a time while the Trump-Xi summit was ongoing in the US. The missle attack drove up oil prices amid supply concerns should geopolitical risks escalate. Fed Dudley shed more lights on the timing and the pace the Fed could trim its balance sheet, heating up discussion on the matter and markets will next look up to Yellen’s speech at University of Michigan for more guidance.

EUR ECB president Mario Draghi said that “outlook for the economy is gradually improving but we have yet to see sufficient evidence to materially alter our assessment of the inflation outlook” and asset purchase is to continue until at least the end of December. The schedule in the Eurozone is comparatively light in nature. Industrial production for February is the main release of note, with a modest increase anticipated, mirroring the overall positive results from last week’s mixed national data. In terms of timelier updates, the German ZEW and the Eurozone Sentix indices will provide us with an early assessment of the economy in April.

GBP UK’s industrial production and pace of expansion in the construction sector disappointed in February as economic growth suffered a setback due to Brexit negotiation. Industrial production contracted 0.70% MoM in February after a revised 0.30% MoM contraction in January amid weak energy demand. In addition, construction output dropped at a steeper pace of 1.70% MoM followed a 0.40% MoM decline in January. The rise in goods imports widened trade deficits to a five month high of £12.46 billion in February (January: 11.97 billion).

JPY Recent batch of Japanese data was somewhat upbeat, suggesting that improving assessment of economic outlook both on the global and domestic front could pave the way for modest but firmer growth this year. The coincident index, an indicator of economic condition in February increased to 115.5 versus January’s reading of 115.1. Forward looking outlook however softened a little, with the leading index pulling back to 104.4 in February (Jan: 104.9).

Technical: 1-3 Day View – 1.0570 symmetry swing support the immediate downside objective achieved, near term resistance is sited at 1.0639 as this contains corrections 1.05 should be tested next, over 1.07 opens 1.0860.

Technical: 1-3 Day View 111.75 range support breached the daily close below here suggests downside range break and opens 108.43 equidistant swing objective to the downside, near term resistance is sited at 112. A daily close over 112 stems near term selling pressure.

1-3 Week View – as 110 weekly symmetry swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 which represents an equidistant swing from the cycle, negates the broader bullish theme.Retail Sentiment: NeutralTrading Take-away: Neutral

Technical: 1-3 Day View – pivotal symmetry swing support sited at 117.69 under pressure a failure here open trend line support at 116.57. Only over 120.50 arrests near term selling pressure.

1-3 Week View – As symmetry swing support sited at 117.69 survives on a closing basis bulls will continue to target weekly symmetry swing resistance sited at 124.42, a weekly close above here would set a broader base for further upside.Retail Sentiment: BullishTrading Take-away: Short

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped 'gambling' and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.